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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. The additional cost incurred from the consumption of the next unit of a good or a service






2. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply






3. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax






4. Ed = 8 - infinite change in demand to price change






5. Es = (%dQs) / (%dPrice)






6. The ability to set the price above the perfectly competitive level






7. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down






8. The difference between total revenue and total explicit costs






9. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital






10. Production inputs that the firm can adjust in the short run to meet changes in demand for their output. Often this is labor and/or raw materials






11. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices






12. Ed < 1






13. The mechanism for combining production resources - with existing technology - into finished goods and services






14. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter






15. The imbalance between limited productive resources and unlimited human wants






16. The difference between the price received and the marginal cost of producing the good. It is the area above the supply curve and under the price






17. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received






18. The most desirable alternative given up as the result of a decision






19. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good






20. The combination of labor and capital that minimizes total costs for a given production rate. Hire L and K so that MPL / PL = MPK / PK or MPL/MPK = PL/PK






21. Entry (or exit) of firms does not shift the cost curves of firms in the industry






22. Entry of new firms shifts the cost curves for all firms upward






23. The total quantity - or total output of a good produced at each quantity of labor employed






24. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.






25. Measures the value of what the next unit of a resource (e.g. - labor) brings to the firm. MRPL = MR x MPL. In a perfectly competitive product market - MRPL = P x MPL. In a monopoly product market - MR < P so MRPm < MRPc.






26. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good






27. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.






28. Ed = 1






29. Ed = (%dQd)/(%dP). Ignore negative sign






30. The rational decision maker chooses an action if MB = MC






31. Exists if a producer can produce a good at lower opportunity cost than all other producers






32. Ei = (%dQd good X)/(%d Income)






33. The additional benefit received from the consumption of the next unit of a good or service






34. Additional costs to society not captured by the market supply curve from the production of a good - result in a price that is too low and a market quantity that is too high. Resources are overallocated to the production of this good






35. Ei > 1






36. Production of the combination of goods and services that provides the most net benefit to society. The optimal quantity of a good is achieved when the MB = MC of the next unit and only occurs at one point on the PPF






37. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.






38. The difference between total revenue and total explicit and implicit costs






39. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC






40. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur






41. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market






42. Models where firms agree to mutually improve their situation






43. Costs that change with the level of output. If output is zero - so are TVCs.






44. AFC = TFC/Q






45. Ex -y = (%dQd good X) / (%d Price Y). If Ex -y > 0 - goods X and Y are substitutes. If Ex -y < 0 - goods X and Y are complementary






46. A measure of industry market power. Sum the market share of the four largest firms and a ratio above 40% is a good indicator of oligopoly






47. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity






48. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0






49. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)






50. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit